National Health Investors, Inc.

Greetings and welcome to the National Health Investors Second Quarter 2023 Earnings Call. At the start of the presentation, all lines will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator, please press star 0. As a reminder, today's call is being recorded Wednesday, August 9, 2023. I would now like to give the conference over to Dana Hambly. Please go ahead.

Thank you, and welcome to the National Health Investors Conference call to review the company's results for the second quarter of 2023. On the call today are Eric Mendelson, President and CEO, Kevin Pascoe, Chief Investment Officer, John Spade, Chief Financial Officer, and David Travis, Chief Accounting Officer. The results, as well as notice of the accessibility of this conference call on a listen-only basis, were released after the market closed yesterday in a press release that's been covered by the financial media. As a reminder, any statements in this conference call which are not historical facts are forward-looking statements. NHI cautions investors that any forward-looking statements may involve risks or uncertainties and are not guarantees of future performance. All forward-looking statements represent NHI's judgment as of the date of this conference call. Investors are urged to carefully review various disclosures made by NHI and its periodic reports filed with the Securities and Exchange Commission, including the risk factors and other information disclosed in NHI's Form 10-Q for the quarter ended June 30, 2023. Copies of these findings are available on the SEC's website at sec.gov or on NHI's website at nhireet.com. In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in NHI's earnings release and related tables and schedules, which have been filed on Form 8K with the SEC. Listeners are encouraged to review those reconciliations provided in the earnings release together with all other information provided in that release. I'll now turn the call over to our CEO, Eric Mendelsohn.

Thank you. Hello, and thanks to everyone for joining us today. We are making progress on our return to growth through our portfolio optimization, improvements in shop operations, and strategic positioning of the balance sheet. Our second quarter results generally experienced stable cash collections as well as increased deferral repayments. However, the quarter was impacted by one-time concessions specific to two senior housing operators totaling approximately $1.9 million or $0.04 per share when compared to the first quarter of 2023. As we often discuss, some of our senior housing tenants are struggling in this post-pandemic era, which introduces variability to our quarterly results. Our long-term outlook has not changed as fundamentals improve in the need-driven senior housing and shop portfolios while our CCRC and SNF platforms remain pillars of stability. Since the end of the first quarter, we completed the sale of seven properties, including one property for $23.7 million that was not previously held for sale and was sold for a substantial gain. This was an opportunistic disposition of a property that needed significant capex and was cash flow negative to our tenant, which would have likely led to future rent concessions. We currently have... just four properties held for sale, which allows us to shift more of our attention and energy to growth initiatives. We see the benefits from the dispositions and other portfolio optimization efforts through significantly improved EBITDARM coverage. This is particularly evident for our need-driven senior housing tenants were coverage, which reflects the impact of our portfolio optimization, improved year-over-year by 37% and sequentially by 10% to 1.22 times. This is the highest ever reported since separately breaking out this category. Favorable occupancy trends and moderating wage inflation give us optimism that coverage will continue to move higher. The shop portfolio improved NOI to 2.1 million from 1.9 million in the first quarter of 2023. While still performing below initial expectations, the move-in trends have improved recently, generating a sizable 170 basis point gain in July occupancy. and we are midway through our CapEx campaign with encouraging results. Kevin will provide more details in just a moment. We anticipate improving shop NOI in the second half of 2023, and our longer-term view of the upside potential remains unchanged. The balance sheet and our financial profile are in great shape, with leverage at just 4.6 times and more than $500 million of revolver capacity. We're very focused on external growth opportunities, which are starting to look more attractive as capital becomes increasingly scarce. We are seeing the direct impact of higher interest rates in the form of more financing opportunities and second tries at deals that fell through for lack of equity financing. As outlined in last night's press release, we adjusted our guidance which reflects this quarter's higher than expected concessions. John will discuss the updated guidance in more detail during his prepared remarks. I want to assure investors that we have taken immediate action to address this quarter's shortfall and therefore expect better results in the third and fourth quarters. Our long-term view of the industry remains incredibly optimistic, and we have plenty of dry powder to support our internal and external growth opportunities. I'll now turn the call over to Kevin to provide more details on our operations. Kevin.